Revenue Optimised LOPAs - Part 1
Nothing beats turning left when you board a longhaul flight. That way lies the plush seats and frills of first class. Meanwhile passengers turning right head towards business class, premium economy and coach. The number of rows they see is the result of decisions their airline took when planning their fleet, decisions which are expensive to get wrong as re-configuration costs are high.
A plane’s cabin plan (known as a LOPA – Layout of Passenger Area) details all the facilities onboard – everything from doors and stretcher positions to trash compactors and cabin attendant seats. Complementing the LOPA, drawn as a map, is a Galley Diagram, drawn vertically, showing what the crew see. Catering specialists design a Galley Loading Plan to figure out where everything needed in-flight can be stored.
In today’s article, the first of two, I explain some of the fundamental principles of LOPA optimisation. In Friday’s article we will apply revenue management to take them further.
The basic principle of LOPA optimisation
Some airlines choose premium heavy LOPAs – British Airways have 132 non-economy seats on their 777-300ERs, 48% of the total. Other airlines are relatively premium light – Turkish Airlines offers just 49 business class seats on the same aircraft, 14% of the total.
It is the same in the galley too. I counted 26 standard unit ports (SU)/18 full trolley ports (FT) on Iberia’s 350-900 and 33 SU/21 FT on Cathay Pacific’s. SU contain two Atlas draws and FT 12, so Cathay Pacific has 19% more galley storage than Iberia.
Cost and weight analysis of seating and galleys is well known – flat beds are heavy, economy seats are light and galleys are expensive. The need for galleys to accommodate mission profiles (more food and drinks are needed on longer flights) is also clear – Cathay Pacific’s larger galleys serve 6,000 mile plus sectors like Hong Kong to Barcelona and Los Angeles, longer routes than Iberia’s operations.
When it comes to LOPAs airlines start with one basic principle:
Start with maximum density and only deviate when doing so has a strong revenue case
The rest of this article is about how airlines can find these revenue cases in practice.
The low and high value principle
An airline’s revenue management tool will avoid selling seats for a lower fare when it believes a higher fare can be achieved later. So if one row of economy seats are removed this will not take away high or average fare passengers, but the lowest. On many flights those seats will not have been sold at all, so no revenue is lost.
In the same way the introductory rows of first class, business class or premium economy will be associated with the highest fares those cabins can offer. Any airline’s revenue specialists will be able to tell you whether or not demand for those cabins exists and if it does what the achievable fares might be.
This leads to the second principle of LOPA optimisation:
Remove low value seats in a lower cabin and replace them with high value seats in a higher cabin until the higher cabin’s demand at worthwhile fares is exhausted
Worthwhile fares are those which pay for the space in excess of what demand at the lowest economy fares would provide.
The space management principle
Using available space efficiently is vital. Higher cabins do not necessarily need to be further forward. Air China puts first behind business class on their 747-8s for example, to fit in bigger seats which they can charge more for. British Airways had World Traveller Plus between First and Club World on their higher density 747s to fit in extra seats and collect more fares.
This leads to the third principle of LOPA optimisation:
If you can fit extra seats by placing galleys and cabins in unconventional positions, do so
Vistara and China Southern even offer business, premium economy and economy on their single aisle aircraft like the A320. They needed more galley space than the minimum to provide tasty business class meals and this took out less space than one row of economy. With the extra space they offered extra leg room to four economy rows, installed another curtain and sold the space as premium economy to inspire some people who would otherwise have paid for economy to pay more, reducing spill costs.
And the fourth principle of LOPA optimisation:
If it costs nothing to enhance the product, do so
That’s all for today. Stay tuned for Fridays article, where I will explain how to incorporate overbooking, fares, flexibility and ancillary revenue into the LOPA optimisation decision.
oliver AT ransonpricing DOT com